Get access to 79+ retention techniques of SaaS, this is a master list of all the retention techniques that are known
The first thing your SaaS buyers do when they want out: They click 'Cancel'... Don't let them go that easy.
In an ethical and respectful way, of course.
When SaaS members click 'Cancel', remind them:
"You'll lose all your data, all your saved lists, and searches. There's a lot of stuff you have in there."
Down-sell a 'hibernation plan' for a low fee to save all their data. This way, you don't get user churn.
You do get revenue churn but lose fewer users. And if they really want to cancel?
The flow asks them, "why are you canceling?" It presents options to help them with whatever problems have.
The last step is to offer a discount. If it works, great. If it doesn't?
They clearly aren't your ideal customer. They weren't going to be with you long-term anyways.
Bonus from SaaS Academy: Cancellation Capture System™ Worksheet by Dan Martell
Source: Anita Toth
1. This means reaching out to customers when the company has made a mistake as a way to personally let them know the impact and what the company is doing about it.
2. Reaching out to customers to talk to them when their account is at risk of churning. Find out what's been happening -- Is there an issue with the product? Are they not finding value? Was there an internal change in their company and the new decision-maker isn't seeing the value of your product?
Having these difficult conversations with customers will increase retention because of the knowledge gained from those conversations.
Source: Will Cannon, Uplead
If you have a SaaS, you ideally have monthly and annual pricing. If you just have monthly pricing, add annual prices. Annual pricing changes the game: All your revenue comes upfront + decreases churn.
The upsell strategy is very simple:
When someone signs up for your SaaS monthly plan, They click 'Buy' and pay on a month-to-month basis.
After they buy the monthly, they should get a pop-up like:
"Pay Annually And Get a 15% Discount!"
This annual upsell sounds small, but if you're doing big numbers? This upsell can add $100,000s or millions of dollars of extra revenue. And you also decrease churn! It's a win-win situation.
If they click no?
You already got the payment for a month, you don't lose anything to try a simple upsell offer.
Your SaaS must be a core part of someone's business/personal life.
Preferably your SaaS plays a DAILY role in your buyers' lives. Churn is gonna be low if your customers use it every day.
There are two types of SaaS for a business:
Solves a 'need'
Solves a 'want'
Imagine money got tight:
Which are they going to cancel first?
Their Netflix subscription or their internet service?
To have low churn, Build a SaaS they can't live without. And structure your pricing to that.
The more they use your SaaS, the more they pay. As they grow their business, so do you.
And they will gladly pay for it. They're growing because of you.
The only reasons they will cancel: They go out of business or go to a competitor.
Almost every department within every SaaS company measures success differently.
Sales teams are responsible for revenue figures, marketing tracks the qualified leads and product tracks the delivery and sprint points thus creating the division and not leading to a coherent strategy
David Cancel, founder and CEO of Drift, shared a simple solution in his talk at SaaSFest 2015: design your internal metrics for every department to incentivize customer retention. This one change, he argued, could help SaaS companies dramatically improve their retention rates.
What does that look like in practice?
Onboarding is important for SaaS firms as this sets up the customer for success.
Dan Wolchonok, head of product and analytics at Reforge, spoke about the three different stages of retention:
Most companies put more effort into improving long-term retention—but it turns out that improving early retention through better onboarding cascades into the rest of your customer life cycle, creating ongoing retention gains.
Dan’s efforts to improve the onboarding experience at HubSpot’s now-defunct Sidekick product drove up first-week retention nearly 15%. What’s more interesting, though, is that those effects continued indefinitely. At week 12, those initial improvements had boosted retention from roughly 15% to over 25%—an improvement of over 60%.
So how can you improve your onboarding and see similar results in your own SaaS? Margaret Kelsey over at Appcues lists some best practices:
According to Lincoln Murphy of Sixteen Ventures, most SaaS companies overthink customer success, even though the definition is fairly straightforward:
"Customer Success is when your customers achieve their Desired Outcome through their interactions with your company."
The key emphasis here is interactions with your company, as Murphy explains:
"Rather than saying 'with your product,' the focus is on all of the interactions your customer has with your company; starting at the earliest touch points of marketing and sales, moving through closing and onboarding, and continuing through their entire lifecycle with you."
Ongoing feedback and engagement with customers are key to combating customer churn—and with the sheer number of engagement and interaction tools on the market today, it’s easy to get started.
First, make sure you’re communicating with customers across multiple channels. In-app notifications target customers when they're actually receiving value and don't require switching programs, catching them in the right place at the right time. Phone calls are especially important for retaining large-ACV, enterprise-level customers. And SMS messages can be used very close to a customers' contract expiration date to drive immediate attention.
Next, work to give customers a personalized experience. Companies who go the extra mile by offering a remarkable experience reap the benefits—according to customer experience adviser Esteban Kolsky, 72% of customers will share a positive experience with six or more people. Take email service provider ConvertKit, for example. By sending personalized welcome videos to each new subscriber (over 50 videos each day), the company was able to reduce their churn rate nearly 15% in only a month.
Finally, invite your customers to provide feedback. Customer success managers and support team members have a direct line into how their customers are using the product and what’s keeping them from reaching their goals, making them the ideal channels for collecting and managing product feedback. This feedback can help you gain a better understanding of your users’ needs and how you could improve your product and service to best meet those needs.
If you’re just getting started, sending out a simple net promoter score (NPS) survey is a great way to start tracking customer satisfaction, but it won’t provide a lot of useful qualitative feedback. Make sure you follow up with detractors and passives to close the feedback loop.
Customer expectations are higher than ever, and poor service costs businesses massive profits. A 2018 report from NewVoiceMedia estimated that poor customer service costs U.S. companies $75 billion in lost business.
Of course, when one customer submits a lot of tickets, it could be a sign that they’re engaging closely with your product. But if those tickets take a long time to close—or worse, many of them end up unresolved—that’s a strong sign the customer’s at a high risk of churning
The best ways to combat churn with exceptional customer service? Be proactive. Look for patterns that might indicate customers are having trouble—recurring support tickets for the same problem, or customers having lots of tickets that remain unresolved. For every ticket, see if there’s an opportunity to proactively monitor for that kind of problem in the future, and either prevent it from happening in the first place or address it more quickly.
Building trust with customers through great support is crucial, especially when unplanned outages inevitably occur. After experiencing an outage earlier this year, Cloudflare managed the situation well, quickly publishing a blog post addressing the outage:
Their post explained in great detail what went wrong, what they’d already done to fix it, and how they were being proactive about preventing it in the future, no doubt helping to retain many customers who might otherwise have churned.
Stellar support brings side benefits for your business as well—besides providing more personalized support, strong customer relationships give you more opportunities you’ll create for upsells and cross-sells. Ian Landsman gives an example of using customer support as an upsell opportunity over on HelpSpot’s blog:
"Customer B is frustrated, and a bit overwhelmed. He thought he was paying for something already, and it turns out that’s not what he bought. What B needs is on a higher cost tier — but now is not the time to have a salesy and promotional tone.
B didn’t call you wanting to pay more. In fact, he doesn’t feel what he’s paying for right now is valuable. Consider what you can offer him to make him feel heard, and make him feel accommodated.
Hi B, we’re sorry to hear about your concerns. We do offer that feature on our Premium level plan, which also includes… We understand you weren’t expecting to upgrade today. Would you like to try our premium features free for 30 days? We wouldn’t expect any commitment to that plan at this time.”
If your product is critical for a business and going down repeatedly, then you can use FMEA technique to reduce the risk and product outage
This technique helps in identifying which instances to focus first in product development to reduce the risk of the platform from going down. This can take 2-3 months in implementation and can increase your uptime to 99.99%
Optimizing your pricing to balance value with profit can have a huge effect on your company’s success, from sales and marketing to retention and profitability. Even though most companies only ever spend a handful of hours on their pricing strategy, your pricing gives you a number of levers you can pull to improve retention.
First, don’t give discounts. Offering a hefty discount on your base prices might juice your numbers up front, but the benefits are short-lived. Discounting can reduce your SaaS lifetime value by over 30%, and discounted customers have just over double the churn rate of those who pay full price.
The problem? Discounts don’t create loyalty; instead, loyalty needs to be earned through providing an excellent product and service that customers can't get anywhere else. And the best way to do that is to raise your prices.
Charging more automatically increases the perceived value of your product, boosting the chances your customers will remain loyal to your company. Raising prices also lets you allocate more resources to customer success, giving customers a better experience and further increasing the likelihood of them sticking around for the long term.
You can’t improve what you aren’t measuring. Without a clear idea of where your retention rate stands right now and how you’re progressing toward your churn reduction goals, you might end up making poor decisions that could kill your progress and stifle your growth.
Tools and metrics can’t fix your churn problem, but they can take care of a lot of heavy lifting for you:
While tools like these make it easy to start tracking metrics, you also need to know how to pull insights out of the raw data.
First, make sure you’re calculating both user retention and MRR retention. User churn is helpful in understanding how well your positioning, customer success, and pricing are working for your business, but MRR retention lets you know whether your company is truly sustainable.
Say you have 100 customers, and 7 of them churn within the same month—that would be a 93% user retention rate. If those customers are all on your highest plan, though, that could end up being a much higher percentage of your revenue. If you only look at the user churn rate, you might assume you’re doing great—while meanwhile, you’re leaking revenue at a prodigious rate.
It’s also helpful to break down customer retention by cohort. A cohort is simply a group of users who share the same sign-up date. Breaking down your customer base by cohort can help you understand when customers are at the highest risk of churn.
Understanding when users are most likely to churn can help answer questions around what they’re struggling with. For example, if you send out a one-month educational onboarding sequence via email and notice that churn is highest after the first month, it might mean you need more product education to help combat that increase in churn.
One of the major reasons for churn is user expectations not being met. This happens when the user is promised something which the product is not able to deliver on.
It is essential to be very clear in your messaging about how you add value for your users. Tell them exactly what they get when they sign up. Besides that is is a good practice to slightly underpromise on the perceived value add and overdeliver, which leads to customers being delighted. Even if you don’t practice this, remember that the vice versa, overpromising value and under delivering on it is a recipe for disaster.
The “A-Ha” moment is the moment the customer starts seeing the value your service adds. From the moment a user signs up, the user experience should be targeted towards getting them to this moment as soon and as smoothly as possible. For this, focus on optimizing your onboarding. Send out instructional content initially to get users acquainted with the service and its features. If your service is more complex, it makes sense to offer free training to the users – people interested in your product will want to learn how it works, and by training them you’re guiding them to the “aha” moment.
Your value proposition is what makes your product unique. A good value proposition is simple, tells the users the concrete results they will get, and can be read and understood in about 5 seconds. It also avoids hype words and business jargon. Clarity is the key.
Constant delivery on the value proposition is a must. It is what your users signed up for, and it is what will get them to stay. It is also a good practice to remind them about your value proposition from time to time.
Showing them what they’re gaining will encourage them to continue their subscription.
The biggest benefit of long-term customers and forming relationships with them is also one of the best customer retention strategies. Users turn into long-term customers as they see the value you provide.
Upselling is a win-win, users get better services, and you get more revenue. It also has a two-fold effect. You are now tackling multiple pain points for the user, so your relationship deepens. With higher billing amounts, the user commitment increases, making them more likely to stick around longer.
You can set up automated emails which get triggered when the user performs a specific action to engage them further. For example, if the user completes designing a sales page, you can send them an email saying, “Congratulations on setting up your first page. Here is how to get the best out of your sales pages”, and direct them to a blog or an informative video.
For example, in this case, you could tell them how pairing your sales page with an exit pop-up can help, and direct them to the pop-up designer in your app. Help like this adds value to the customers’ efforts and makes them stay.
Imagine subscribing to a service and hearing from them only when money is getting withdrawn from your bank account. Not pleasant, right? Via your interactions, you have to make the user mindful of the value you provide so they don’t end up associating you with the feeling of losing money for nothing.
This is why maintaining regular customer interaction is crucial for retention. Even if you don’t if you’re not regularly sending content heavy emails, call them once in a while just to say “hi” or see how they are doing with the product. It shows the users that you care beyond the money - you actually want to help them achieve their goals.
This is another way to let users know that you’re working to help them achieve their goals. Invite constructive feedback on your product (more about this later), and keep improving your product via upgrades and new features.
As users see more value over time, customer retention rates will keep increasing. Churn also occurs sometimes due to boredom –as users interact with a similar platform over time, it may result in decreased perceived value and lesser engagement consequently. Releasing new versions will help fight that.
Feedback on the customer service resolution experience can be a great way to optimize your process, but it can also annoy the user in unwanted ways. Put yourself in the users’ shoes. You faced an issue and went through the trouble of getting it resolved. Thankfully, (assuming) the resolution process was smooth. But now the team keeps on pestering you to give feedback on your experience. It’s the same as the annoying reporter asking a crash victim questions about their rescue as soon as they’re saved. The key to getting them to talk is the time and place.
Ask for feedback in places where you need to make users feel a sense of being in power. So you could try placing a link on your pricing page, or when you send out your monthly newsletter etc. Make sure it is visually appealing and inviting for users to actually give their feedback.
Building a support community around your brand is a great idea. It has benefits for both the user and the company. By getting to interact with other users and you, the users will get a feeling of belonging. That’s where you move from a formal to a personal relationship for them. Interacting with your users at a grassroots level is also a source of invaluable feedback. Moz’s feature request forum is a great example of a mix of these concepts. It allows users to ask for features they’d like to see, where either other users or the company representatives can reply.
Let’s be clear – if someone wants to leave, never make it hard for them to do it. This approach which works in real life holds true for SaaS as well. Make your cancellation policy super simple to avoid breakouts on social media by grumpy users. People mostly leave for a reason, and here you can leverage exit surveys to gain enormous insight into things you are doing wrong. This will help you increase retention for future users.
How many times have you been excited to try a new product, started a free trial, and then been so turned off by the product tour that you never wanted to touch it again?
The classic problem with traditional product tours like this is that they show all users the same generic features in the same generic order each time. There’s no personalization to the user’s individual needs or use case.
In other words, it’s a top-down tour where the user has to follow along and obey passively.
Newsflash: no-one learns like this. That’s why mainstream education sucks, by the way.
Traditional product tours just destroy Day 1 retention, crippling your SaaS business before it’s even had a chance to get off the ground.
By contrast, an interactive walkthrough is more like a two-way conversation. The user is directed to the specific features that are most useful to their specific use case, based on the information the customer shares in-app.
This strategy works best when you only show the user the specific features they need to use in order to activate. If you do any more than that in your walkthrough, you risk causing churn by overwhelming the user with too much at once.
Social sharing app Kontentino created their interactive walkthrough using Userpilot. After collecting some initial data about the user in a welcome screen, they elegantly point them towards the two main features the user needs to activate: connecting their social media account (see above) and making their first post.
The result? Kontentino increased their user activation by 10% within one month of installing Userpilot. That’s a lot of users who didn’t churn in the first few days. You can read a full case study about Kontentino’s retention strategy here.
There are certain product experiences that have a tendency to just suck you in.
Online games are the perfect example of this. There’s a natural human tendency to want to play, and so the time just flies by.
Intelligent companies are aware of the human tendency towards play, and exploit it in their SaaS so that the user feels like they’re playing a game when they’re using the product.
One example of an area you can use this is in your welcome screen.
Source: eset.com
Rather than collect initial user data through a dry survey, why not have users choose from a variety of preset avatars? It will feel like the beginning of an MMO game!
Other common gamification elements include:
Back in 2009, a lot of Foursquare’s initial user retention was down to gamification. Whenever a user visited a new place on Foursquare, they received points, with the possibility of becoming the “Mayor” of a given location if they visited it for a certain length of time.
Naturally, everyone wanted to be the mayor, and so users kept using Foursquare over and over in a frenzy. And retention went through the roof.
Nobody wants to use a product that makes you fill in endless forms with loads of pointless fields. The Internet has reduced our attention span and made us lazy!
To retain more customers, consider removing as many unnecessary roadblocks from your experience flows as possible, especially your sign-up flow.
Here are some specific roadblocks you could get rid of:
If you want an example of what a frictionless sign-up form should look like, look no further than Airtable:
Super simple, no more fields needed than necessary. And note the nice third-party registration via Google at the bottom for the laziest customers (including yours truly).
Have you ever tried to start a portrait, a picture, or an extended piece of writing? The worst moment is when you stare at the blank piece of paper and feel this overwhelming sense of lacking inspiration.
It’s much more motivating once you have a few sketches or paragraphs. Even if your first effort is poor, it’s always easier to edit than it is to create.
You can make the same argument for SaaS businesses.
The empty dashboards that often greet users when they start using a new product or a new feature are really rather depressing. There’s nothing going on there, so the activation energy required to create something from scratch seems overwhelming.
If a user is on a platform like this, it’s sometimes easier to quit the platform completely than to start using it from scratch.
The way to solve this problem is to create templates, case studies and placeholder data, and include them in your product to show users what they could potentially do.
This retention strategy is in a bit of a moral grey zone, so use it at your peril!
The term ludic loop was coined by NYU professor Natasha Dow Schüll to describe the process of repetitively chasing a reward that always seems just out of reach. Schüll originally observed ludic loops in the world of gambling and slot machines, but the concept is just as relevant for SaaS businesses.
The four components of a ludic loop are:
In other words, if you can design a product that a customer can use when alone with their device, that instantly offers a psychological reward that varies each time, and that experience can be never-ending, you’ve created a ludic loop.
This is basically a recipe for addiction by design. World of Warcraft and slot machines all follow this same model.
If you want an example of a software product that has retained users through a ludic loop, look no further than Facebook. How many of us have spent hours using the endless scroll feature? It’s a ludic loop because:
if you’re going to use this strategy, so please ensure that you’re encouraging your customers to use something that’s actually going to make their lives better! Ludic loops have a dark side.
If you’re like most product managers and think that onboarding users only happens in their first few days of using your product, the term secondary onboarding might seem a little self-contradictory.
Isn’t onboarding over once the user understands their way around the product?
Well, no.
According to the Oxford Languages Dictionary, onboarding in the sense of products is defined as “familiarizing a new customer or client with one’s products or services.”
Does learning about a product ever end? No, learning is a constant journey.
For example, many are using WordPress for around ten years, and definitely don’t know everything (and would mistrust anyone who says they do know everything).
Allow yourself to think of onboarding not as a “one and done” activity, but instead as continuously leading the user further down the product adoption journey.
You should create onboarding activities at every stage of the user journey, hence the terms secondary onboarding, tertiary onboarding and even “evergreen” onboarding.
One company that does secondary onboarding well is Hubspot.
Hubspot uses a tooltip to encourage a user to save their email as a template. This is something that will save someone who is using Hubspot frequently a lot of time, so it’s a tip that’s aimed at an advanced user, not a beginner.
A user receiving a tip like this would be less likely to churn due to frustration with endless copying and pasting.
Net Promoter Score, or NPS for short, is a way of measuring how likely a user would be to refer you to their friends on a scale of 1-10.
If you measure NPS on a monthly basis and track changes over time (hey, we allow you to do that!), you’ll have a way to predict which customers are likely to churn and which you are likely to retain. It’s a good idea for customer support to seek dialogue with the Passives to nip any issues in the bud before they become Detractors.
The very best companies will complement the quantitative data they get from NPS surveys with qualitative follow-up surveys as well. This gives you more data at your fingertips to understand why a given user is scoring your SaaS in a particular way.
It’s possible to create both NPS surveys and qualitative follow-up surveys in-app using Userpilot. We like surveying users in-app rather than by email, because this means that they’re not distracted by opening email surveys and will spend more time in your SaaS product.
The more your SaaS grows, the more customer support data you’ll need to manage and the greater the need to keep it organized and categorized.
Having an organized customer support database will allow you to respond quickly to concerns using templates that already proved successful at solving similar issues in the past. Customers will appreciate your responsiveness, and you can expect this to translate into higher retention.
Here are the main categories by which you should sort the feedback that you get:
Of course, once you’ve categorized the feedback, you will still need to follow up on it and take action! Otherwise the whole act of categorization will be for nothing.
This retention strategy is all about making your customers feel special and like they are part of a privileged few.
Customer loyalty programs are generally set up in one of three ways:
If you’ve worked in a customer-facing role in a SaaS business, like customer support or customer success, you’ll know that after a while you start to see the same issues cropping up multiple times.
Sure, it’s valuable to address each issue manually with the individual who raised it, but it’s even more valuable to address these issues pre-emptively, before they become a problem for users. Prevention is the best cure.
This starts with building a knowledge base so that users can fix some of their issues on their own, without requiring to talk to your support team.
If you recall from earlier, the key reason why product tours suck is because they deliver a generic list of generic features to all users. The solution here is to deliver an interactive walkthrough that is personalized to the needs of the individual customer.
To extrapolate a general principle from this example: the more personalized your customer experience is, the more likely it is that they will want to stick around.
Here are some stats from research conducted by Instapage that underline this point:
In the modern digital era, the way to really show customers that they matter is to take the time to connect with them in the real, analog world.
Userpilot sends each of our customers personal, hand-written Christmas cards.
It’s just a small gesture, but our customers love it. It turns our online relationship into an offline one. Both are real, but opening these physical letters adds a visceral element that the Internet cannot match.
Do what you say and say what you’ll do.
Just as your friends and family will judge you for not holding yourself to a high standard of personal integrity, so your customers will judge your SaaS company for not being consistent with how you position yourself in the marketplace.
Why is consistent messaging important to retain customers? Consider the following:
The first 100 days are going to be important, create a specific 100 days communication plan with your users
The communication plan should take into account that its frequency and mode can change based on your product but here is a simple plan, you can create your plan based on the platforms suitable for your user
Source: Robert Skrob
Get your customers to help you do the selling. With product analytics, you can identify which customers are your power users and champions. These are the customers who can provide compelling testimonials that encourage others to use a software and pay for upsells. They also show new customers the value of the software, which is a huge win for retention.
A higher price creates a perception of greater value. Such a perception turns into a reality once the customer spends the money. They have committed to a cost, and that cost is reflected on their balance sheet.
Now that they’ve made the expenditure, the customer is far more likely to use the product (engagement). Engagement is the number-one predictor of customer retention. You’ve effectively sparked engagement and reduced the likelihood of that customer canceling.
The most important way to improve your churn rate is to drive engagement. Here’s how Lincoln Murphy defines engagement: “Engagement is when your customer is realizing value from your SaaS.”
How does a customer realize value from your SaaS? By using it.
Whatever you can do to and for the customer to get them to use your product, do it. Emails, questions, phone calls, encouragements, bribery: get the customer to use your service.
The sooner they use it, the quicker they realize value. The quicker they realize value, the less likely they are to quit.
The more complex your software, the more users will want to learn about its power. Provide free webinars or training sessions to coach users on how to get more value out of the SaaS.
There are several advantages to such an approach. First, you’re increasing the value of the SaaS to the customer. Second, you’re creating a deeper relationship between you and the customer. Both of these features can help to reduce churn.
When customers suggest improvements, they are investing themselves in the life and existence of the company. They feel a sense of ownership.
Since this is true, make feedback a significant part of your retention strategy. I’m not simply referring to some “suggestion box” tucked away in a dark corner of your website. Instead, create overt invitations for improvements on your pricing page, a link from your monthly invoice, or some other place where customers will see it.
Make it your goal to respond to all customer inquiries in 24 hours or less. If it’s during the workday, shave that time down to two hours. Customers deserve your immediate attention.
If your customers follow you on social media, follow them back. This serves two purposes. First, you make them feel good — like they are a valued part of your social circles. Second, you can listen to them and respond to their feedback.
One VentureBeat article puts the issue plainly:
By constantly monitoring the social web, the customer success team ensures that they quickly reply to all inquiries or feedback. In fact, many users have lauded companies for their quick responses on Facebook and Twitter.
The more touch points you have with your customers, the more likely they are to stay highly engaged. Be sure to create a robust social presence so your customers will both see you and be able to reach out to you on whatever forum they prefer.
Obviously, social media is not strictly a retention strategy, but it does encourage awareness of your SaaS in front of the customer. This awareness, in turn, can improve engagement. And engagement, as you’ve learned, is the number-one way to reduce churn rate.
Psychologists have discovered that when people progress towards a goal, they feel much happier and fulfilled.
You can apply this truth to your life as a whole, and you can apply it to the microcosm of SaaS. When SaaS users work towards a goal, they develop an eagerness and intensity to have more interaction with the SaaS.
The most obvious place we see this is with games, in which users attain new levels and rankings. But the same holds true for non-game applications. LinkedIn, for example, indicates a user’s progress towards filling out their profile. The Audible App gives users badges for listening to their audiobooks at a certain time or with certain patterns.
If you can delight your customers with simple goal-focused actions, you can retain them better and reduce churn.
If you create a retention team, it proves that you’re serious about customer retention.
Plus, a retention team provides you with a dedicated resource for engaging with clients. Here’s what your retention team can do:
The more aggressively you tackle the problem of turnover, the better you’ll succeed in retaining your customers.
SaaS providers live in a tricky world. They have to be both a service and software. They can’t fake it on either front or just pretend that they’re a software or a service. They have to truly be both.
But why is it that your customers pay you every month? Because you’re serving them. Can they see that? Can they feel that? Do they know that? If you can provide service in tangible ways, you will become vastly more successful at retaining customers.
Create a strategy to roll out service improvements on a schedule that corresponds to your billing schedule. Every month, the customer watches a payment withdrawn for their recurring billing. They need to feel like they are getting something in return. Increase security, upgrade storage, or implement other features that make the customer feel like they’re getting additional value.
What do your SaaS customers want most?
Thankfully, you don’t have to guess. A survey from Vormetric discovered that security is a top concern, especially for SaaS enterprise customers. SaaS is oft-criticized for its lack of security.
In reality, SaaS can be incredibly secure. You just have to prove it to your customers.
Customers want to hear that you are taking active measures to secure their data. The way that you can do this is by incrementally adding new layers of security, rolling it out, and announcing it to your clients.
With every new security iteration, you can build the confidence of your customers. Be aware, however, that this technique has diminishing returns. If you keep making things more and more secure, they may start to wonder why you’re beefing up security. Is there a threat?
Make the changes, with a full disclosure that there is no threat, but you are simply committed to the highest level of security that technology allows
How would you feel is you were subscribing to, say, Buzzfeed, a content sharing analysis tool. You were plodding along at the pro level for $99/month. You used it a lot, and kind of wished you had enough in your budget to afford the agency level plan.
One day, you get an email from a BuzzSumo VP. He says, “Hey, I noticed you’ve been using Buzzfeed quite a bit. We’d like to upgrade your membership, at no charge, to the agency level subscription. You’ll get quite a bit more power out of the tool, and plenty more mentions. I hope you find it useful. The change is effective immediately.”
I’d say you’d be pretty happy about that. I’d even go on to say that you’d stick with BuzzSumo for a long time. How much did it cost BuzzSumo to upgrade your membership? Probably not much. A few pennies maybe.
How much did it increase your likelihood of remaining a customer? A whole lot.
Surprise gifts or delightful experiences are a powerful way of turning laissez faire users into passionate evangelists. Not only do you amp up your marketing, but you also improve your retention rate.
If a customer is committed to leaving, so be it. But can you have a word with them before they walk away?
Some customers will be so disgruntled that they won’t want to have anything else to do with you. Others will be amenable to answering a few questions or chatting on the phone. Remember, your goal isn’t to get them back. Don’t even try.
Instead, make it your point to understand why they left. You can use this information to transform your process and create more value for your existing customers.
I’ve suggested that you create a customer retention team. To take this a level deeper, I also suggest that you assign each customer a retention specialist.
If you have a few clients, each paying a lot of money, this technique is extremely effective. A customer retention specialist is someone whose job it is to interact with the client on a regular basis. They may not be able to answer advanced technical questions, but they can at least keep customers happy.
If a customer goes on alert, it’s too late to form a relationship and salvage them. The care and relationship need to be happening long before that point. A customer retention specialist will keep that care and nurture in place
In-app onboarding means embedding content like step-by-step interactive walkthroughs, tooltips, and pop-ups within your app, so users can learn how to use it in a practical, hands-on way. In-app onboarding allows you to “show” customers how your app works while they use it, rather than tell them what to do via a lengthy demo or a knowledge base outside of the app. Through real-time guidance, in-app onboarding makes it easier for customers to derive value from your app and thus remain a customer.
Self-help options allow customers to troubleshoot product problems on their own, without waiting in long customer service queues on the phone or another customer service channel. Interestingly, 81% of customers actually prefer solving problems on their own before contacting customer support for assistance, which makes self-help important.
There are various self-help options you can add to your website or app, so customers can help themselves. These include:
With more customers preferring a self-service support model, adopting self-help options can be a huge driver in customer retention.
The Self Help menu is contextual, which means it only displays information related to the section of the app a user is in and relevant to the user’s role (admin, manager, and so on).
Customer feedback gives you insight into how each customer is (and isn’t) using your app. Using this intel, you can offer individual support to provide value to customers one at a time – helping to retain customers.
Additionally, new customer feedback also reveals insights that may boost your overall retention efforts. For instance, if you consistently hear that onboarding is confusing, your product team can use that feedback to reassess onboarding flow to make a clearer, more welcoming experience for new customers to increase retention. Or, if certain customers tell you your product isn’t a good fit for them, you could refine your marketing messages to attract the right kind of users that are likely to use your product longer.
Ask new customers for feedback at critical points in their product journey: after they’ve filled in their profile, after they’ve completed an important task in your app, and after they’ve been a customer for a certain period. Send in-app surveys, so customers can respond when your product is top of mind. Tools such as Chameleon are good options to create in-app surveys.
For instance, take a look at this quick survey Privy uses to get new customer feedback on its product:
PandaDoc uses a similar survey, but it also asks users what they find difficult to do within the product, so it can help the current customer and improve its onboarding process, too:
For new customers who don’t use your app frequently, send a quick note asking about their experience so far and how you can help them get more value out of your product.
Your app, product, or service may not always be top of mind for your customers, but their goals and pain points are. Sending updates reminds users of the important problems they wanted to solve and connects your product back to something that’s inherently valuable to your customers.
Email is a good channel to share progress reports with users. Progress reports usually list the most recent activities a user has performed within an app and any significant achievements they’ve made, like money saved or calories avoided. If different groups of people use your app, the report may also include updates of what different team members are up to within the app.
For instance, Grammarly sends a Weekly Writing Update email to users with insights about their writing: the volume of new words they used, how many words users wrote per week, and the top mistakes they made.
On the other hand, Tettra sends a daily digest email listing all new documents that were created and updated in the app and the total views received for pages in Tettra.
As Nir Eyal, author of “Hooked: How to Build Habit-Forming Products,” explains, content helps potential buyers habitually think about your product or service. If you regularly share helpful content with current and new customers, they’re likely to see your brand and product as trustworthy. In addition, you can add calls to action within your content to drive readers back to your product.
To engage existing users, create content that helps them overcome challenges they face regularly and get better at their job. Tutorials, product guides, ideas for projects, and original research are good options to touch base regularly with existing customers.
Zapier is a good example of a SaaS product that harnesses content to engage customers. It publishes a ton of helpful guides on automating work with Zapier, as well as general guides on productivity and wellness.
Within each piece of content is a quick call to action for users to try a given feature or process with Zapier, thus leading readers back to the product.
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The best way to prevent churn is to identify which customers are likely to churn and proactively reach out to win them back. Your most successful customers likely perform certain actions in your app within a certain period of time, which keeps them invested in your product. When customers don’t complete these key actions in your product in a given time, it may be a red flag for churn.
To identify red flags for churn, first identify product usage patterns for your most successful customers such as:
Once you’ve identified usage patterns for regular users, use them as benchmarks to compare user activity for all customers. Product analytics tools such as Mixpanel and Heap can help you track usage data for different customers.
GrooveHQ uses red flag metrics to identify which customers are likely to churn and reach out to it. For instance, two of its red flag metrics are frequency of logins and length of the first session in the first 30 days. Users who leave after 30 days have short first sessions and log in less often. Thus, Groove’s customer success team keeps an eye out for these red flags and reaches out to at-risk users by email.
Giving power customers early access to new features has two main benefits:
As software developer Nick Bradbury points out, “power users want to be in control of the software they use.” Even if you choose to ignore power users’ feedback, asking for their opinion can win you brownie points, too.
Create in-app surveys or emails asking power users if they’d like to beta test new features and answer a few questions. If you run an online community or forum for users, post your request there, too. Tell users what the new tool or feature will help them accomplish and how they can contribute to its improvement and avail early access.
See how Moz asks beta testers from its community of power users to try its new marketing tool.
It emphasizes both early access and a chance to contribute to the product to get users excited about beta testing the new tool.
A product-focused community allows power users to share their experiences with other users, learn about features and benefits they may have missed, and help other users troubleshoot problems, too. In the process, communities help power users become more invested in your product and brand and thus make them likely to stay with your brand.
Use these ideas to build virtual and in-person communities around your product:
For example, take a look at the different ways Notion builds and nurtures a community around its product:
The tool allows users to create and share creative ways to use Notion, teach classes on using Notion, and run virtual events. Notion also promotes these events to its customers through its website and on its social media channels.
When your aim is to maximise engagement and retention, timing is a crucial factor in delivering incentives, notification or rewards before users lose so much interest that it’s difficult or impossible to bring them back on board.
For this reason, incentives are most effective when they’re delivered based on user data that shows drops in engagement or signs that customers could be about to churn, allowing you to respond before they stop using your software or cancel their subscription.
For example, if you know that usage tends to drop mid-way through the second annual contract, this data suggests that you might want to put incentives in place ahead of this period to boost engagement through to the latter stages of the subscription and, then, you can focus on securing the renewal.
Better yet, you want an automated system for tracking engagement based on session data to compile user engagement scores and flag up indicators of engagement drops and potential churn – and this is one of the many roles ActiveCampaignplays for us here at Vertical Leap.
We use ActiveCampaign to track user session data, manage customer health and automate responses to drops in engagement through triggered notifications, emails and cross-platform messages.
This allows us to react to churn dangers before they materialise and keep users engaged while interest is still relatively high and they’re typically more responsive to our messages.
Understanding why software users stop using SaaS products and cancel their subscriptions is key to implementing effective retention strategies.
Source: SuperOffice
Time and again, studies show that the vast majority of churn is attributed to the perception that software companies don’t care about customers and their individual needs.
So, with this in mind, let’s look at how you can use customer service strategies to show users that you’re a SaaS company that genuinely cares about them.
The first line of defence for a SaaS company is having sufficient online documentation and support resources that users can easily find and navigate online.
This documentation helps users get the best out of your software products and solve basic technical issues without needing to get in touch with your support team. Not only does this improve the customer experience and reduce the danger of churn, but it also lightens the load on your support team which is able to prioritise their efforts on more pressing issues.
ActiveCampaign provides extensive online documentation to help users get the best from its software and solve basic issues.
Another key benefit of having this kind of extensive online documentation is that you can automate first responses through chatbots, notifications and emails, pointing users to relevant online documentation while your human support team works through tickets.
Depending on the quality of your online documentation, you should be able to close a significant number of cases before your team even picks them up. This relies on striking a careful balance between extensive documentation that’s also easy to navigate and understand.
This, combined with an automated system that directs users to support content and asks them if this documentation has solved their problems, can handle a decent percentage of cases without support team members needing to get involved – a win for customers and your support system alike.
We touched on automation in the previous section and this is a key technology for SaaS companies, especially when you have large user bases to take care of with a finite support team.
The more you enable users to solve problems for themselves, the happier they are and the less strain is placed on your support team, which can focus all of its resources on cases that can’t be automated.
Source: Groovehq.com
Crucially, studies show that users want to solve problems for themselves, without getting in touch with a technical support team – and why not? Self-service systems allow users to solve problems faster and get back to achieving better things with your software product.
The challenge is to automate as much of the customer support system as you can without dehumanising by it removing too many personalised interactions. Don’t forget that 68% of customers say they stop buying because they feel the company doesn’t care about them – so, once again, you have to strike a balance here.
As mentioned earlier, user data is your friend here and using a system like ActiveCampaign to automate customer support with personalisation helps you find this balance.
To boost customer retention, eliminate friction in the customer’s product journey
If customers have to pass through multiple hoops to use your product, it’s unlikely they’ll stick around for too long. To boost customer retention, make your customers’ product journey frictionless. A frictionless customer journey usually starts with effective onboarding.
As soon as users log in to your product, they should understand how to complete key tasks in your product without referring to your knowledge base or contacting customer support. If possible, provide users with step-by-step cues to perform critical tasks and help them experience their “aha!” moment with your product quickly—the moment where they first derive value out of your product.
Next, allow customers to gradually learn about different features of your app at their own pace, instead of forcing them to watch a 12-step product tour at once. Offer help and tips based on the user’s role within an organization and their app usage, so your onboarding remains relevant. Create self-help widgets throughout your app for users to quickly find tutorials and guides.
Chatbots are an excellent way to deliver instant, interactive responses to technical issues on your website.
Once again, the aim here is to help users solve issues for themselves wherever possible but you can also use chatbots to collect crucial information that will help support team members to solve problems – e.g.: which browser or OS customers are using, which version of your software or any other relevant info you don’t already have access to.
Zendesk is another great solution for automating conversational support.
Another benefit of the conversational experience is that it actually takes longer for users to progress through the basics than it would through automated email responses where all of the same information is delivered in one message, rather than a series of segmented questions.
Despite this, engagement is actually higher, thanks to the interactive and segmented, personalised interactions – all of which builds a more satisfying experience, even though it takes longer to achieve the same outcome.
Again, psychology plays a huge role here
According to a survey carried out by Gartner, 88% of account managers say that servicing accounts to a higher standard than customer expectations is a crucial growth strategy for software companies.
The same study admits that “account managers have a big job” on their hands in the modern SaaS business.
“Account managers are now expected to provide service, resolve issues and maximize consumption and ROI — all while selling additional new products and services. Account managers are also expected to achieve growth by connecting multiple products together into complex solutions.”
As Gartner says, account managers are there to keep existing customers happy, resolve any issues they experience and help them get the best out of your software products. However, they also play a key role in upselling and cross-selling relevant customers to more expensive plans and other products.
If you sell multiple software products, then cross-selling is an important strategy in terms of maximising customer value and preventing them from using similar products from rival providers.
For example, HubSpot offers separate software products for marketing, sales, customer service and a premium CMS, in addition to its free CRM and a range of other free tools.
Clearly, HubSpot wants customers signed up to its Marketing Hub to also buy into its Sales Hub rather than get this functionality from an alternative provider, such as Salesforce.
It’s not only a question of getting as much money from each customer as possible but also locking them into as much of your offering as possible. A customer signed up to multiple products is far more likely to keep using all of them, especially if these products integrate together seamlessly and make life easier when used together.
All SaaS companies face the challenge of keeping users engaged but there comes a point where usage inevitably drops.
All of the strategies we’ve looked at in this article help to extend the period of engagement for as long as possible but there comes a point (or multiple points) where your customers show less interest in your product.
Your task here is to remind users of why they signed up in the first place and reignite some of the excitement that kept them using your product until their recent dip. You might try to incentivise re-engagement like the Skillshare example above but the aim is to inspire lasting re-engagement rather than short-lived, quick fixes.
This may seem obvious but if your SaaS product has bugs in them and people are regularly facing downtime, then you will see people leaving the product and going somewhere else
Instead of adding new features, keep a % of sprint backlog for resolution to bugs this will help your tech and product team deliver the smoother experience and also reduce the tech debt
Whether it’s action-focused or time-based, triggers improve user experience and help customers understand how to use your SaaS product.
Intellifluence, an influencer marketing SaaS startup, automates its user onboarding with consistent software-based triggers. These triggers are determined by a series of factors such as lack of action and frequent action.
“A client isn’t going to renew for the long-term if they aren’t using your product, so we’ve designed a variety of logic-based events to gently nudge them in the direction of taking specific actions that will lead them to see success within the platform. When there’s an alignment between user onboarding and user success, retention improves.”
Joe Sinkwitz, CEO of Intellifluence
Here’s an example of a trigger at Intellifluence.
When a brand user creates a campaign but doesn’t add other users after three days (according to Joe, the probability of these customers churning increases dramatically at this stage), they will receive an email or a push notification to guide them on the appropriate steps.
Joe shares with Breadcrumbs that he’s developed triggers for hundreds of friction points in the system to help his brands and influencers be as successful as possible.
“The smoother every step is, the higher likelihood of retaining them. The brands that complete campaigns and take steps to accomplish their KPIs will have better success, and therefore stay with us longer.”
Joe Sinkwitz, CEO of Intellifluence
Pro Tip: Add a personalized touch in your “breakup” email. At Intellifluence, Joe will personally reach out to churned customers to determine the reason they left.
Why do this?
As Joe explains: “Just by listening, you can help solve the problem from occurring again and can occasionally win a client back who just needed to be heard.”
Having a customer sign up for your SaaS is just the first step. The next is actually getting them to use it. And, that can be more difficult than it sounds.
Don’t let the inactive users fall through the cracks. At the same time, don’t assume everyone who signs up for your service is going to jump in and use it right away.
Take the proactive approach. Offer an original follow up a few days after the first customer contact, then follow up again with a free consultation.
Let’s face it, who doesn’t love getting a discount or special bonus from a product or service you use and love? No one.
So capitalize on that. Choose to highlight just how awesome your customer service is by leaving customers surprised and delighted with free stuff.
Some ideas:
Something like this which is a small cost for your brand upfront, can be the thing that tips the scales in your favor for customer retention.
Hand in hand with providing customer service is having a quick response rate. The last thing you need is having a customer who is already frustrated feel like no one is listening to them and doesn’t want to help.
Depending on the size of your team, work on assigning a specific customer service person to each customer so they have someone to deal with personally.
Also have hard limits on the response time if you can get a response within 24 hours, strive to make that standard across your customer service team.
Keep hearing the same complaints over and over again about your product? Turns out it’s not them, it’s you.
Keep an ear to what your customers are saying. That could be searching for your brand on social media and see what people are saying, it could be having a few key questions you ask during phone calls with customers, or even during an exit interview.
You can learn quite a bit on the things that work, and the gaps that don’t by listening to what you customers say and implementing changes to fix it.
This is a lesson in making things easy for your customers. Research has found that credit cards typically expire every three years.
We’ve all had that experience where a card has expired and suddenly our inboxes are full of emails telling us we didn’t pay for a product or service. It’s incredibly annoying.
Rise above that by tracking the expiration dates of your customers credit cards. Before the card expires, send an automated email out reminding them the card is set to expire and how they can easily update their credit card information.
Even before a customer becomes a former customer there are signs they might not be that into your service anymore. You don’t want to wait until they already have a foot out the door before you try to pull them back in.
Instead, have a series of warning triggers that indicate a user is likely to leave. Granted, some might not be your perfect customer, but there are plenty of users who can stay with you, if you pay attention to them before they leave.
Inside your retention strategy, include these triggers and set up actions your team can take each step of the way.
Who is in charge of customer retention and churn for your SaaS company? The CEO? Customer service? Marketing? A task force of cross-functional teams?
If you’re not sure, you're not alone. The question of ownership is an important one -- so now’s a good time to settle this.
Typically, marketing is well-poised to manage churn, having access to and expertise in customer data, automation tools, and a deep knowledge of the customer in general. If your marketing team does not “own” customer churn, make sure they are still involved to help adjust strategies accordingly.
Can you determine which factors that are contributing to customer churn? Be sure you have a system in place to isolate and identify the triggers that may be causing churn.
One way to do this? Ask your customers! Using a Net Promoter Score (NPS) is a relatively quick and easy way to gauge whether your customers are satisfied with your product or service. Here’s how to do it.
Many companies also use software to monitor product usage and engagement, for example, and automation/analytics tools that provide further insights into your marketing tactics.
For SaaS companies, common churn triggers include:
These are just some of the many tactics to help evaluate churn triggers; oftentimes such strategies fall under the larger umbrella of Customer Success.
Involuntary churn is when a customer churns without intending to. This can happen if their payment fails and it leads to subscription cancellation. In these situations, the customer didn’t fall out of love with your product, or intentionally stop paying their subscription fee – but you still risk losing them completely.
In fact, involuntary churn accounts for 20%-40% of SaaS churn. That’s an astonishing number, and bear in mind that these are customers (and revenue) lost every month that don’t actually want to stop using your product.
It can be a silent assassin for SaaS businesses. But it’s also avoidable if you take the time to understand the churn in your business and find out:
From here, you can put measures in place to reduce or - even better - prevent it.
Sometimes churn is unavoidable, but the more you monitor patterns and trends, the higher the chances of stopping it. You need to define your KPIs and metrics clearly to know what you want to measure. Tracking your SaaS retention metrics must be top of mind if you want to succeed at the churn and retention game. The KPIs that you should track differ at different stages of a customer journey.
Crafting SaaS retention strategies accordingly will go a long way in retaining key customers.
The KPIs that you will use to measure success are:
This is the point at which your customers have a firm grasp of your product and have begun to explore its features. At this stage, it’s critical to track how clients interact with the platform and which features they use the most.
Here, the KPIs will change. The following are the analytics or the metrics to be used at the adoption stage:
You don’t have to predict who will renew using CustomerSuccessBox. Instead, you’ll have all the information you need to keep clients by combining real-time account health with CRM data and customer billing. It notifies you if it detects anything that could indicate a future churn risk, allowing you to jump directly into where you’re required while still having time to rescue the account.
The analytics that you should use here is as follows:
The more information you have about when and how customers churn, the easier it will be to detect at-risk accounts and implement a client retention strategy to assist mitigate the risk. You can also look for patterns by breaking down your churn data into different customer segments. This could aid in identifying the reasons for churn and, in turn, preventing it in the future.
Yes, you read that right. Not every customer will stay, but even those that go can teach us something. Follow up with those who do depart to see if you can figure out why they left. Instead of using this as a chance to try to reclaim them, see it as a useful learning experience.
A customer may opt to discontinue using your product for a variety of reasons. It’s likely that their priorities have shifted, and your solution no longer aligns with their current initiatives. Or they were having trouble learning your product and didn’t have the time to devote to it. Once you’ve drilled down to the root of the problem, you need to keep track of it and work on a solution.
Hire Optiblack to increase your retention
Vishal runs a SaaS Product Growth Firm - Optiblack. Optiblack works with SaaS companies to increase their active users and provides product development services. Optiblack is on a misson to create 1000+ SaaS companies in its portfolio to increase activation.
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